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Monthly Archives for February 2011

Newspaper publishers should study last week’s purchase by AOL of the Huffington Post for $315 million. Isn’t this an era when newspapers are failing? How did HuffPo, which started with $1 million in funding in 2005, grow so fast? The answer is HuffPo doesn’t think like a newspaper. Much of HuffPo’s content is created by bloggers for free. Articles are optimized (SEO‘d) for Google search. Keywords are posted above articles to drive Google SERP rankings. Sharing and tweeting of articles is encouraged. Live blogs and comment streams from readers run alongside articles to be shared and retweeted. As a result, the New York Timesreports, 35 percent of the Huffington Post’s traffic comes from SEO. Perhaps coincidentally, January saw the IPO of Demand Media, a company that identifies topics with high advertising potential (via search engine query data and bids on ad auctions) and then creates and delivers that content via owned and operated sites like eHow. This puts Demand Media in a similar category as Associated Content and AOL’s Seed, platforms that accept submissions from writers and photographers who get paid for each work submitted. Some traditional journalists find these models unseemly, because they turn the traditional journalism model on its head. Articles are created based on reader search patterns by freelancers and bloggers instead of based on what professional journalists deem newsworthy. But these models succeed because they leverage the strengths of the web. The web puts power in the hands of users. These models recognize that search and social sharing are the expressions of user demand. If newspapers continue to deliver only what they consider fit to print, they will continue to watch online upstarts benefit at their expense.

The news in yellow pages land has not been good. Last year saw the bankruptcies of RHD (now Dex One) and Supermedia (formerly Idearc), followed by announcements of layoffs at those companies. Last week brought news of layoffs at Yellowbook. Now comes Greg Sterling‘s Screenwerk blog noting that Comscore is looking at possible traffic assignment irregularities at IYPs. The traffic assignment issue stems from the practice where one site buys traffic from another: local searches get routed from one site to another and results are served up by the buyer. ComScore accepts an assignment letter and traffic gets credited to the buyer. This can raise questions about whether credit has been apportioned correctly or whether double counting has occurred. More broadly, this brings to light the question of IYP popularity. IYPs have boasted that swelling Comscore traffic numbers proved increased site popularity. The fact is that purchased traffic for some IYPs exceeds 50%. So increased Comscore numbers may reflect not more popularity but bigger budgets. Essentially IYPs are buying clicks from 3rd parties and reselling it to advertisers (at higher rates). It’s an arbitrage game. The purchases are necessary because IYP organic traffic is not growing fast enough. For this reason, yellow page players are looking to products outside the IYP — such as SEM, Social Media Management, Reputation Management, and Group Buying Sites — to show much needed revenue growth.